Growth stocks such as Lyft (NASDAQ: LYFT) and Beyond Meat (NASDAQ: BYND) have burnt massive wealth for investors in the last year. The two stocks went public in 2019 and have since disappointed market participants due to their less-than-impressive performance.
Shares of Lyft were listed on the Nasdaq at the start of 2019 at $72. The LYFT stock touched a high of $80 and is now trading at $16.72 per share. Similarly, the IPO price for Beyond Meat stood at $25 per share. The BYND stock surged to a record high of $235 in July 2019 and is currently trading at $23.
Let’s see if these beaten-down growth stocks can stage a comeback by the end of 2022.
Ride-sharing company Lyft announced its Q1 results earlier this month and reported revenue of $876 million which was an increase of 44% year over year. Comparatively, its adjusted earnings stood at $0.07 per share. While Lyft surpassed estimates in Q1, it forecast revenue between $950 million and $1 billion in the June quarter which was below consensus forecasts of $1.02 billion.
LYFT stock fell by more than 7% yesterday after the company disclosed it will trim costs and freeze hiring decisions due to an uncertain economy.
Investors remain worried about Lyft’s long-term potential as it continues to report an operating loss. In Q1, its operating loss stood at $200 million while free cash flow was a negative $167 million. Lyft also emphasized it would increase incentive spending on drivers which will negatively impact the bottom line.
Alternatively, Lyft is valued at less than 1.5x forward sales given its market cap stands at $5.8 billion, and the company is forecast to increase sales by 32% to $4.23 billion in 2022. Its adjusted earnings per share are estimated at $0.32 compared to a loss of $0.25 per share in 2021.
Additionally, Lyft ended Q1 with a cash balance of $2.2 billion which provides it with enough runway to improve profit margins going forward.
Valued at $1.45 billion by market cap, Beyond Meat has been among the worst performers on the Nasdaq in the past year. In the March quarter, Beyond Meat reported revenue of $109.5 million, an increase of just 1.2% year over year. Its gross margins fell to 0.2% compared to 30.2% in the year-ago quarter, widening its losses to $100.5 million or $1.58 per share.
Analysts forecast the company to report revenue of $112.4 million with a loss per share of $0.97 in the quarter.
Beyond Meat confirmed its gross margin issues were temporary as it continues to spend heavily on strategic launches and marketing. The company forecasts sales between $560 million and $620 million in 2022, valuing BYND stock at 2.5 times forward sales. It also represents an increase of 27% at the midpoint of its guidance.
Despite its tepid Q1 results, Beyond Meat maintained its full-year forecast but it did not provide any estimates for the bottom line making investors nervous. Analysts expect its loss per share to almost double to $4.5 in 2022, compared to $2.87 in 2021.
Beyond Meat claimed it is focused on improving its supply chain and increasing production to meet rising demand. In Q1, Beyond Meat's sales growth was unimpressive due to lower prices, as the company’s product volume was up 12.4% and the price per pound fell by 10%.
Beyond Meat aims to reduce the price difference between original meat products and its suite of plant-based substitutes. But it will have to achieve its goal without reducing profit margins in order for the business to be sustainable.